We simply don't know, from the information given in the latest report and at the conference call, whether subscriber growth is really as high as reported, given the impact of fraud.
I agree and Arun gives a nice explanation, too. Perhaps more importantly is the "average growth rate of paying subscriber additions" to model the true additions of subs in the future ... ie ... do we get there from here? But, where exactly is here ? That's why it is of utmost importance to filter/remove this "fraud=noise" from the business model ASAP to see where Leap really stands in their growth-rate story.
Given how I heard the CC, it appears that management is comfortably cautious they will prevail and moving forward this issue will be much less pervasive. Let's hope, as Arun just suggested, their subs "estimate" is w/o fraud or is conservative enough that by year end, targets will still be met. Management has indicated as much - if I understood them correctly.
The market is still deciding ... but seems to have accepted some guidance from analysts supporting Leap's thesis. I would hope that Leap would have more open to any reduction in subs numbers due to fraud during the CC if they thought fraud accounted for a large % (2x% or more) of the subs they reported in their system. If they were not open enough, then I doubt most models can be accurate moving forward based on current subs reported - since growth rates are not truly known at this point. One could never know if it is linear or parabolic growth rate. You first have to know if the fraudulent subs attacking the system was linear or parabolic in nature over time: ie, did the fraud ramp up because of word of mouth and easiness of success prior to its recognition and subsequent curtailment.
Maybe the above discussion is unnecessary, but perhaps something to ponder ?
regards,
metman |
